Three years into a five-year hospital payment pilot, Maryland hospitals were meeting or exceeding the model's goals for cost reduction and quality improvement, according to a new report released by the Maryland Department of Health.
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For nearly 40 years, Maryland had a unique payment system for nearly 40 years under which all payers reimbursed hospitals at the same rates, which were set by a state commission.
But facing rising health expenditures and high readmission rates, CMS and Maryland in 2014 reached a five-year deal that went even further: Under the setup, all payers in the state set annual global budgets for hospitals to cover both inpatient and outpatient care. The idea was that the fixed, predictable revenues would give hospitals flexibility to invest in care improvements and make care more valuable for patients and payers.
The "all-payer" program was voluntary, but within six months, every hospital in the state signed up to scrap fee-for-service reimbursement. Under the pilot:
The new report covers the first three years of the program, 2014 through 2016. During that period:
The report did not cover 2017, though Maryland officials said the savings continued last year.
Mercy Medical Center in Baltimore has been described by policymakers as one of the more aggressive facilities at reducing costs, according to Kaiser Health News. CMO Wilma Rowe said about one-third of patients leave the hospital with a prescription medication already in hand, which reduces the risk of a patient returning to the ED, as patients commonly fail to fill follow-up prescriptions.
Separately, Greater Baltimore Medical Center has hired several primary care doctors to monitor about 1,000 patients with diabetes. According to CEO John Chessare, clinicians often visit elderly patients at their homes to stave off a hospital visit.
John McDonough, a health policy professor at Harvard T.H. Chan School of Public Health, said of the pilot, "It looks like it has very strong results." He added that Maryland's model "is pretty bold and it's pretty thoughtfully done and has generated a huge amount of interest around the country."
Joseph Antos, an economist at the conservative-leaning American Enterprise Institute who sits on Maryland's hospital-payment commission, said, "These are not fake savings." He added, "It didn't happen instantaneously. It's taken this number of years to achieve the kinds of savings that you see" for 2016 and thereafter.
Separately, Joshua Sharfstein, former Maryland health secretary who shepherded the pilot to approval, said, "There is a range of responses. Some hospitals have been able to do more than others." He added, "Change in health care is notoriously slow" (Hancock, Kaiser Health News, 3/19; Eichensehr, Baltimore Business Journal, 3/16; Maryland Department of Health report, 3/2018).
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